June 20 (SeeNews) - Bosnia's troubled smelter Aluminij, which is under threat of collapse due to heavy debts, will need more than 500 million marka ($289 million/ 256 million euro) to survive, local media reported on Thursday.
Such an amount could only come from a foreign strategic partner, otherwise the Mostar-based aluminium smelter could quickly end up in bankruptcy, according to the findings of a recent audit of the company, news daily Dnevni Avaz quoted unnamed sources from the government of Bosnia's Federation entity as saying.
According to the media report, the audit conducted by KPMG upon request of the Federation government has confirmed Aluminij's huge losses, determined its financial state is alarming and concluded that the only life-saving measure for the smelter is privatisation, otherwise its collapse is imminent.
The audit has confirmed that at of end of April Aluminij had an overdue debt of 280 million marka to state-controlled power utility Elektroprivreda HZHB, which cut its power supplies to the troubled smelter on June 16.
At the end of April Aluminij also owed an overall 22 million marka to banks, including UniCredit Bank (8.5 million marka), Raiffeisen Bank BiH (6.4 million marka), the local arm of Austria's HETA Asset Resolution, the 'bad bank' of former Hypo Alpe Adria International (5.7 million marka) and Razvojna Banka (1.4 million marka).
In addition, the company had outstanding liabilities to domestic suppliers of 28 million marka and to foreign suppliers of almost 47 million marka.
"No hope for survival is coming from the current operations since all parametres are negative," Dnevni Avaz quoted KPMG as saying in the audit report.
Still, British-Swiss company Glencore, which has been cooperating with Aluminij for more than 20 years, remains the most serious candidate for a possible takeover of the Bosnian company, Dnevni Avaz quoted an unnamed government official as saying.
Glencore representatives have reportedly already scheduled meetings with the Federation government to discuss a possible privatisation of Aluminij, and the government is awaiting to see their more detailed investment plan, according to the media report.
In case privatisation talks are launched, Aluminij will need to name a new management board to include representatives of minority shareholders and the government of Croatia, which control a stake of 56% among themselves.
The remaining 44% shareholding interest is owned by the government of the Federation - one of the two autonomous entities that make up Bosnia and Herzegovina. The other is the Serb Republic.
(1 euro = 1.95583 marka)